The Question about Jobs and Money
In South Africa, it is settled law that an employer could, through a proper consultation process, propose changes to employees’ terms of conditions of employment as a measure to avoid retrenchments and to remain a viable business. [See our previous
Blog Post here for a discussion of this.] Should employees refuse to agree to such changes, they could be retrenched – to make place for new employees who are prepared to accept those terms and conditions. This
has been confirmed by the Labour Appeal Court last year in the case of NUMSA v Aveng Trident Steel  ZALAC 36.
This is however not an easy decision for any employer to make, nor is the process likely to be a smooth one. Any proposed changes are likely to be met with resistance by employees and unions – especially if it hits their pocket, and understandably so. For the
employer, losing experienced staff and employing new people may not be a good operational decision – and financially, there is the issue of severance pay packages which may be beyond the ability of the employer to pay, especially now (although the LRA does
allow for forfeiture of severance pay if the employee refuses a reasonable alternative to retrenchment).
So, is there another option? Do employers, having exhausted consultations on all possible alternatives to retrenchment and being unable to reach agreement with employees on necessary changes to their
terms and conditions of employment, have no other choices than (1) retrenchment or (2) continuing with an unsustainable situation that is likely to see the business in ruins before long?
In a recent
article by Cowan-Harper-Madikizela, labour attorney Neil Coetzer points out that employers are entitled to unilaterally change employees’ conditions of service in order to save jobs if this stage of the process
is reached. He refers to precedents in our case law where the changes proposed by employers were bona fide and genuine attempts to avoid retrenchment and were then implemented unilaterally when agreement with employees could not be reached, instead of resorting
Coetzer further argues that there is in fact a duty on employers to consider the unilateral implementation of such changes in order to avoid retrenchments, and that this might be a factor in considering the fairness of an ultimate retrenchment.
Let’s consider the situation where the employer duly implements contentious changes to terms and conditions of employment (e.g. salary reductions) as a last resort to avoid retrenchments and to keep its business sustainable. Apart from the legal arguments,
there are also other implications to consider.
At this point, there have been no actual dismissals – so the reasonableness of the changes that were implemented does not come into play; nor can the employees refer unfair dismissal disputes or give notice to strike in the case of a large scale retrenchment. Employees
would have a claim, however, relating to a unilateral change in conditions of employment – which would allow unions to call a to strike to have employees’ original terms and conditions restored.
The employer could potentially apply for an interdict to prohibit the strike on the basis that the changes were effected through a lawful s189-process – and it could be argued, suggests Coetzer, that the employer should not be penalised for avoiding retrenchments
and that allowing strike action in circumstances such as this would disincentivise employers from trying to save jobs. There is however no legal precedent for this approach, so we will have to wait and see what the courts have to say about it.
Financially and operationally:
The situation above would mean that an employer is potentially either faced with a strike (more losses and the inability to start rebuilding an already floundering business); or paying legal fees for an interdict application, which may or may not be successful.
Either way – even if the strike is interdicted; or there is no strike and employees are compelled to work under the newly imposed changed terms and conditions – the employer is bound to have to deal with many disgruntled employees who are recalcitrant and unhappy,
and potentially rather harming the business and employee morale instead of pulling together to help save the business.
So – there are no easy answers to this situation. It is a catch-22 for both employers and employees: damned if you do, and damned if you don’t. There can be no win-win or ideal resolution. Nobody wanted this situation; nobody wished for it; nobody deserves
it – yet here we all are. All we can hope for, are for rational minds to prevail – for transparency and bona fide attempts from employers, employees and unions to find the best possible solution to minimise the fallout. Maybe this is also a time that is ripe
for a ‘reset’ in the adversity that has plagued South African labour relations for so many decades.
“When the winds of change blow, some build walls and others build windmills.“